Nelnet, one of the nation’s largest student loan servicers, agreed to purchase a competitor student loan servicer, Great Lakes Higher Education Corp., for $150 million in an all-cash transaction.
The move will make Nebraska-based Nelnet the largest servicer of federal student loans, and represents a significant consolidation in the student loan servicing sector.
With this transaction, Nelnet/Great Lakes, Navient and FedLoan Servicing (PHEAA) become the three dominant student loan servicers who collectively service over $1 trillion of student loans.
So what does this acquisition mean for your student loans?
Here’s what you need to know.
What Is A Student Loan Servicer?
Think of a student loan servicer as providing both customer service and repayment support during the life of your student loan.
Student loan servicers play an intermediate role between a borrower and a lender. They process monthly student loan payments, manage borrower accounts and answer borrower questions.
If you borrow a student loan, your lender may not be the entity that manages your student loan after it is disbursed. While some companies act as both a lender and servicer, often times a separate company will service your loan.
A loan servicer will also work with you for free on student loan repayment plans and student loan consolidation.
It is possible – and more common today – that your lender (either the federal government or a private lender) transfers your student loan to one or more servicers while your student loan is in repayment.
You don’t need to worry if you receive a notice that your student loan has been transferred to another servicer. It is not a reflection of you or student loan.
If this happens, you should contact your new student loan servicer and update your bill pay information if you use autopay (which you should). Also, if your student loan is transferred to a new student loan servicer, there are no changes to your loan terms.